Business Interruption Insurance

Memphis Business Interruption Insurance Attorneys

Helping business owners in the greater Memphis area recoup losses due to the coronavirus

Nearly every Memphis business is suffering due to the COVID-19 pandemic. Restaurants, hotels, retail stores, churches, and any business with a physical structure is affected by the loss of customers. Musicians, artists, and everyone who relies on live audiences are hurting as well. Even when businesses reopen, many customers are likely to stay home until there is a medical solution. Already, two major national retailers, J. Crew and Neiman Marcus, have filed for bankruptcy protection.

At Bailey & Greer, PLLC, our trial lawyers understand how this health crisis is affecting everyone in multiple ways – economically, physically, and mentally. We are now helping businesses understand their legal options, including the possibility of filing business interruption claims. Businesses still need to pay mortgages, insurance premiums, loans, and utility bills. During the COVID-19 crisis, Memphis businesses of all sizes need to be able to pay their employees, buy supplies, and pay a range of business costs. Without loans and insurance coverage, businesses need to rely on what limited income they can earn until business improves.

What risks does Memphis business interruption insurance cover?

Even during reasonably healthy times, every business should invest in business interruption insurance. This coverage is generally an add-on to your business insurance. Business interruption insurance is generally payable when there is physical damage to a businesses’ buildings, manufacturing plants, offices, and other physical structures. Common risks covered by property and business interruption insurance include damage caused by:

Hurricanes

Fires

Tornadoes

Hailstorms

Theft and Vandalism

Business and property owners generally need to purchase separate insurance for flood insurance.

What damages can Memphis businesses claim with business interruption insurance?

Car dealerships, apartment complexes, professional offices, and other types of businesses who have a valid business interruption insurance can make the following damage demands through their Memphis business interruption insurance lawyers:

Overhead expenses. These are recurring expenses, often monthly, that must be paid to keep the businesses afloat. They include mortgages, rent, licenses, liability insurance, workers’ compensation insurance, and other necessary expenses.

Memphis businesses and organizations want to pay their employees during bad times. Employees who are still working for the company while business is interrupted need to be paid. Some employees are under contract and must be paid according to the terms of the contract. Business interruption insurance should include compensation for workers who are furloughed or who aren’t offered work during a business shutdown.

Lost profits. This is the money the company loses because the business can’t operate in the same manner it did before the insured risk caused the business to stop functioning. Lost profit calculations are usually based on tax returns, profit and loss statements, financial evaluations of the type and scope of the business, and other factors.

Information technology costs. Businesses need access to customer and vendor databases, company software and hardware, and other IT needs. They need to pay information technology personnel to keep, update, and expand their computer operations. In the case of COVID-19, almost every business is relying on IT to communicate with clients, vendors, and staff.

Relocation costs. If a business is physically damaged, the owners of the business may need to relocate to other facilities to run operations. The cost to find and move into a new location is quite expensive and time-consuming. In the case of the coronavirus pandemic, business relocation means moving some operations to the homes of the owners, managers, and staff. Businesses that can stay open need to make fixes to comply with Memphis and state laws and good business practices to accommodate the buying public.

Business interruption insurance may also cover other expenses depending on the nature of the business.

Does business interruption insurance cover losses due to COVID-19?

The answer to this question is currently a topic for debate in states and in the courts. Many insurance companies claim that business interruption insurance does not cover COVID-19 for several reasons.

The losses are excluded. Most business interruption insurance policies specifically exclude viral infections or pandemics.

The economic damage must be due to a physical loss. Since business interruption is secondary to the property damage, insurance companies claim that COVID-19 isn’t covered because there’s no physical damage to the offices and property – even though they effectively can’t be used.

Our Memphis business interruption insurance lawyers have counter-arguments, depending on the exact wording of the insurance policy.

Unclear exclusions. Since the insurance company drafts the insurance policy, all policy interpretations should generally be in favor of the claimant. This means that if the insurance company did not specifically exclude viral infections, pandemics, or coronavirus, then the exclusion may not apply.

Civil authority insurance. The business owners may have had civil authority coverage. Civil authority insurance is a type of business insurance that is payable if the government denies access to the property of a business owner. Many businesses, during the COVID-19 pandemic’s initial stages, were locked down by government orders.

What other types of business insurance may cover Memphis pandemic claims?

Some business interruption insurance policies are based on factors other than standard disaster events such as hurricanes or fires, or external events such as vandalism. One type is called “event insurance.” Here, the word event refers to an event offered by the business that must be cancelled due to a business risk. A recent example was that Wimbledon received an insurance payout of more than $140 million due to canceling its tennis tournament from the COVID-19 pandemic. Businesses that sponsor musical, entertainment, and sporting events throughout Memphis may want to consider this type of business interruption insurance in the future. Any company that had event insurance may already be eligible.

What laws may help Memphis companies recover insurance losses?

The federal and Tennessee governments may consider mandating that business damages due to COVID-19 be compensated. Currently, the CARES ACT, which was enacted in response to the pandemic, provides a Paycheck Protection Program to help companies pay employees during the pandemic. CARES is short for Coronavirus Aid, Relief, and Economic Security.

Applicants that may be eligible under the CARES ACT include:

Small businesses

Nonprofit organizations

Veterans organizations

Tribal businesses

Self-employed individuals and independent contractors

The funds may also help pay for employee benefits and other business expenses. Further, several state legislatures have introduced laws mandating business interruption insurance retroactively include COVID-19, and more states are considering prohibiting viral infection exclusion clauses.

The COVID-19 pandemic is financially hurting many businesses and organizations, as well as individuals throughout Tennessee. At Bailey & Greer, PLLC, we have a team of experienced trial attorneys with a long history of fighting bad faith insurance companies. To discuss your right to business interruption insurance, call our Memphis office at 901-475-7434 or fill out our contact form to schedule a consultation.